Our new Cryptocurrency section has arrived! Click here

Less Ads, More Data, More Tools Register for FREE

RBC Capital upgrades Diageo to 'outperform'

Tue, 3rd Dec 2019 12:50

(Sharecast News) - RBC Capital Markets upgraded shares of drinks company Diageo to 'outperform' from 'sector perform' on Tuesday, hiking the price target to 3,500p from 3,100p.
Not only is Diageo growing revenue faster than most consumer staples companies, but it's doing so in its more highly priced, higher margin categories, RBC said, noting that this bodes well for its ambition to be a reliable compounder of growth.

"We're big believers in the virtuous circle school of management: companies invest to drive revenue growth yielding declining cost ratios enabling them to raise margins and step up revenue investment," it said, adding that "Diageo seems to get it".

"Marketing/sales has risen in each of the last three years; this looks likely to continue. Sales growth has done likewise, and with consumer sentiment for its largest brands amongst the most favourable in the alcoholic beverages sector according to RBC Elements (our data science team) we expect it to remain robust."

RBC said it expects operating profit growth at the upper end of Diageo's 5-7% medium-term guidance range.

At 1250 GMT, the shares were up 0.5% at 3,141p.

Related Shares

More News

UK BROKER RATINGS SUMMARY: Investec Prefers PageGroup Over Hays

UK BROKER RATINGS SUMMARY: Investec Prefers PageGroup Over Hays

10 Dec 19 09:33

UPDATE 2-UK shares weaken, Tullow loses half its market cap

* FTSE 100, FTSE 250 down 0.1%* Tesco outshines the main index* Some domestic stocks gain on election optimism* Tullow Oil plummets after co cancels dividend, CEO exits (Adds company news items, updates share moves)By Muvija M and Shashwat AwasthiDe...

9 Dec 19 09:23

FTSE 100 movers: Evraz drops, Fresnillo climbs

(Sharecast News) - London's FTSE 100 was lower by 1.72% at 7,160.65 in afternoon trade on Tuesday, with Evraz leading the index downward.

3 Dec 19 14:02

Tuesday broker round up

(Sharecast News) - Aston Martin Lagonda: Goldman Sachs downgrades to neutral with a target price of 520p.

3 Dec 19 13:24

Login to your account

Don't have an account? Click here to register.